Commissions Are Not Kickbacks

I have heard for years that commissions are devil-spawn.  Nobody should take them or give them.  They give all creative business a black eye.  Nonsense.

Kickbacks, hidden vendor discounts, and all things under-the-table, these are devil-spawn and give all creative businesses a black eye.  Why? Because the client does not know what they are paying for.  And make no mistake, if kickbacks are involved, margins in all creative businesses are just not there to say that the client does not bear some of the cost of the commission.  A $200 flower arrangement with a fifteen percent commission may not be $230 but it is certainly more than $200.

So let us keep our terminology straight.  If you charge or pay a percentage and the client knows about it, you are paying or receiving a commission.  This is true even if the client is paying said commission by way of a percentage on the cost of the project.  If you charge or pay a percentage and the client does NOT know about it, you are paying or receiving a kickback.  Rely on the ostrich idea that the client is not affected is a great way to get yourself your very own fabulous orange jump suit.

With terminology in hand, we can just focus on a real conversation about commissions – getting paid on the cost of production, what commissions mean today and where we are headed in the future.

Artists are going to have to get paid what they need or they are going to die.  Get paid straight up by saying, “I need $x to do this project”.  If there is a percentage component, there will be increasing pressure to finalize what the project cost is going to be upfront or at least with certainty prior to any presentation of budget.  The reason is simple: no client is going to trust you if you do not do this work.  The days of a client thinking they can spend $100 to have their project completed but then wind up spending $1,000 are coming to an end.  And good riddance since this very notion of bait and switch, of preying on a client’s ignorance as to the reality of their vision in your hands is the very reason most creative business owners are not taken seriously as business people.  You are the expert.  You know what your work costs to complete — your way.  Once you are comfortable with the work you are going to do for any particular client, you have to also be comfortable sharing what the cost of that work is going to be. Period.

Which all gets me back to commissions.  If you charge a percentage of the cost of production and if there is certainty as to the actual cost, then the commission conversation disappears.  You need to make the amount you need to make to do the work.  The bigger the project, the more work there will be for you, the artist, to undertake on the client’s behalf to bring the project to life.  Notice, “bring the project to life”.  Commissions, because they are based on the cost of production, HAVE to be related to to, ahem, production only.  When commissions become part of design, you are sunk and also a liar.  Whether you charge a fee, get paid by the hour or in some other way, design has nothing to do with commissions since you have not made it up yet.  Yes, part of design is narrowing and ultimately pinpointing what your commission will be.  If you conflate the two, how exactly are you going to get your client to trust you?  After all, the bigger the budget, the more you will make so how do I, the client, know that the $500 floral arrangement is really what is needed or just how you plan on making the money you need to make? You cannot.  So keep the cost of design separate from both the actual cost of production and what you need to make the cost of production happen.

If we can go down this road as creative business owners, we will get closer to defining how much each of us needs to do the work we do.  This will be a defined range.  For instance, interior designers between thirty-five and forty-five percent of the cost of a project, wedding planners/designers between eighteen and twenty-five percent (not including the sale of any products).  Those in the business of selling product, in addition to the percentages, should make an additional fifty percent on the actual products sold.  This will then be how kickbacks will be undone.  Clients will become smarter and smarter about what creative business owners need to earn on their projects and will become ever dubious when the numbers do not make sense.

An example: if there is a $300,000 wedding and the planner involved is charging a $30,000 flat fee, clients will, rightly, assume there are kickbacks happening since the planner needs to make at least $54,000 to undertake the project.  The $24,000 has to come from somewhere and clients will be able to be wise to that if only we first acknowledge that commissions are not a bad word, but simply a mechanism for how to be paid appropriately to bring a project to life.

Last, one way or another, a client pays commissions.  Whether they pay directly or through the increased vendor cost, they will foot the bill.  So saying that client paid commissions are somehow better than vendor paid commissions is an exercise in mental masturbation, at best, self-aggrandizing delusion at worst.  The way out is certainty.  Certainty as to the actual cost of production and what you, the creative business owner, needs to do your best work.

There will always be shady people who want to both commissions AND kickbacks.  To those who would do this, participate in or even condone such activity, you deserve all of the shame you get when you are inevitably exposed.  Charge what you need to charge.  Be proud of your value and get what you need straight up and leave the “getting-over” for dead, where it belongs.